TP&EHTPScheme:ProcedureForRegistration

Procedure

For

Approval

under

STP

Scheme

Units undertaking to export their entire production of goods and services may be
set up under the Software Technology Park Scheme. Commensurate with the
policy to give a special thrust to export of computer software, such units would be
encouraged to be set up under the aforementioned export oriented scheme.
Software units may undertake exports using data communication links or in the
form of physical exports [which may be through courier services also], including
export
of
professional
services.
In order to become a certified member unit under STP Scheme, approval from the
competent authority is required. The steps involved for obtaining approval are as
follows :
Submission of application :
An application in the prescribed format for establishing a Software
Technology Park unit is to be submitted to Software Technology Parks of
India.
The application should be along with the details of the Software Project in
terms of strengths, area of expertise, marketing arrangement, business plans,
means of finance, mode of export projected P & L and Balance Sheet
[Optional]
Each application should be duly signed in initials by the competent authority
on each page of the application along with office seal of the company.
The application should be supported by Certificate of Incorporation, under the
Companies Act of 1956, Memorandum of Association, Articles of
Association, of the company.
Resume of the Chief Executive heading the STP operations.

In case FIPB/RBI Approval for bringing in Foreign Equity or & NRI

Repatriation of Capital is already obtained a copy of the approval should be
accompanied with the application.
In case the project is for setting up a STP as 100% Subsidiary/Branch office a
copy of the incorporation certificate of the parent company along with the
board resolution for setting up the subsidiary is to be attached with the
application.
Copy of the lease deed / sale deed for the proposed STP premises.
Details of previous export performance if any along with copy of IE code.
Competent

Authority

for

approval

Director Of Software Technology Parks Of India

Time

Type Of Investment

Amount
Investment

Resident Holding

Less than
20.00
Million

frame

for

processing

Of No.of
Application
US$
1

and

granting

approvals

In case the applications are complete in all respect, the time frame for granting
approval is generally as below :
Director(S) STPI

10 working days

IMSC [MIT]

Six weeks

FIPB
Eight weeks
[Ministry of Industry, SIA]
The above time frame may vary due to unavoidable circumstances.
Application must accompany a Demand Draft of Rs. 2,500/- drawn in favour of
"The Director STPI" as processing fees.

STP

&

EHTP

Schemes

Policy and Benefits

Software Technology Park [STP] Scheme is a 100% export oriented scheme for
undertaking software development for export using data communication links or in
the form of physical media including export of professional services.
The society was set up to contribute to the prosperity of the national economy
through promotion of exports from the Software & services Industry by facilitating
all the statutory services of the Govt., strengthening the Communication
Infrastructure and by increasing the quality consciousness in the Industry.
The benefits under the STP & EHTP Scheme
Approvals are given under single window clearance mechanism.
An STP project may be set up any where in India.
Jurisdictional Directors have the powers to approve import of capital goods
(net of taxes) not more than US$ 20 million.
100% Foreign equity is permitted.
All the imports of Hardware & Software in the STP units are completely duty
free, import of second hand capital goods also permitted.

Re-Export of capital goods are permitted.

Simplified Minimum Export Performance norms i.e., (STP & EHTP scheme)

Net Foreign Exchange Earnings to be positive.

Domestic purchases by STP unit are eligible for the benefit of deemed exports
to the equipment suppliers.
Use of computer system for commercial training purpose is permissible
subject to the condition that no computer terminals are installed outside the
STP premises.
The sales in the Domestic Tariff Area [DTA] shall be permissible upto 50% of
the export in value terms.
The capital goods purchased from the Domestic Tariff Area [DTA] are entitled
for the benefits like levy of Excise Duty & Reimbursement of Central Sales
Tax [CST].
Capital invested by Foreign Entrepreneurs Know - How Fees, Royalty,
Dividend etc., can freely repatriated after payment of Income Taxes due on
them if any.
Depreciation on Capital Goods above 90% over a period of five years and also
the accelerated rate of 7% per quarter during the first two years subject to an
overall limit of 70% in the first three years.
Call center permitted under the STPI scheme.
All Services as listed in appx.54 of hand book of procedures (EXIM) are

eligible for facility of STP scheme

Service providers eligible for recognition as 'Service Export House',
International Service Export House' or International Star service House'
Statutory Complaince for STP Units
Important statutory compliance for STP units are listed below as reference
Accounts

Each of such unit is required to maintain separate accounts for its operations.
Separate annual balance sheet will have to be made for each such unit which would
be become a part of the main balance sheet of the company. For maintaining
separate accounts the following will have to be done:
Maintenance of Separate Cash & Bank book and corresponding vouchers.
Maintenance of sales invoices.
Maintenance of Fixed Assets register.
Maintenance of Foreign Inward Remittance Certificate file (FIRC's) & Bank
Realisation Certificate file where the original of the FIRC's and BRCs are
kept.
Maintenance of contract file, where copies of contracts received from buyers
are maintained.
Preparation of yearly balance sheet for the unit which would ultimately
become a part of the balance sheet of the company.
Banking

Each unit is required to maintain separate bank accounts for its operations. The
units is free to have as many bank accounts as it desires but shall have to designate
a single branch of bank whom all export documents will be submitted. In other
words the work of handling of all shipping documents and realisation of export
proceeds will have to be entrusted to this designated bank branch.

Special Economic Zones (SEZs)

Special Economic Zones (SEZs) are specific geographical regions that have
economic laws different from and more liberal than a countrys typical economic
laws. The goal is usually an increase in Foreign Direct Investment (FDI) in the
country. A policy for setting up of SEZs in the country with a view to provide an
internationally competitive and hassle free environment for exports was introduced
on April 1, 2000 . An SEZ is like a foreign territory within a country. An SEZ is
governed by a special set of rules to facilitate foreign direct investment for exportoriented production. These zones are typically marked by minimum bureaucracy,
best infrastructure, generous tax holidays, unlimited duty free imports of raw,
intermediate and final goods as well as capital goods and a package of incentives
to attract foreign and domestic investments for promoting export-led growth. Units
may be set up in SEZ for manufacturing of goods and/or rendering of Services.
SEZs are not a new phenomenon in INDIA , In fact, the first such zone in the
country was set up way back in 1965 at Kandla. But it was known then as the
Economic Processing Zone. Thereafter, in 1972, the Santacruz Electronic Export
Processing Zone (SEEPZ) was launched in Mumbai.
The main objectives of the SEZ Act are:
Generation of additional economic activity
Promotion of exports of goods and services;
Promotion of investment from domestic and foreign sources;
Creation of employment opportunities;
Development of infrastructure facilities;

It is expected that this will trigger a large flow of foreign and domestic investment
in SEZs, in infrastructure and productive capacity, leading to generation of
additional economic activity and creation of employment opportunities.
Types of SEZs
A developer can set up SEZs of the following types:
1. SECTOR SPECIFIC SEZs
Defined as a zone meant exclusively for one or more products or services in
one sector.
Minimum area requirement is 100 hectares (reduced to 50 hectares for
specified States and Territories).
For Electronic hardware and software including IT/ITES, minimum area
required is 10 Hectares with a minimum built up processing area of one lakh
square rneters.
For biotechnology, non-conventional energy including solar energy
equipments/cells, or gem and jewellery sectors, the minimum area
requirement is 10 Hectares.
2. MULTI-PRODUCT SEZs
Signifies an SEZ where units may be set up for manufacture/rendering of
services of two or more goods/services in a sector or goods/services falling
in two or more sectors.
Minimum area requirement is 1000 hectares (reduced to 200 hectares for
specified States and Territories like in Assam , Meghalaya, Nagaiand,
Mizoram, Manipur, J&K, Tripura , Sikkim , Himachal Pradesh and
Uttranchai ).
Minimum area requirement for SEZ exclusively for services is 100 hectares.
3. PORT/AIRPORT BASED SEZs
Minimum area requirement is 100 hectares.

4. FREE TRADE AN D WAREHOUSING ZONES (FTWZ}

Minimum area requirement is 40 hectares with a built-up area of 100,000 sq.
meters.
Benefits/Incentive/Facilities available for SEZ enterprises
Exemption from customs / excise duties for development of SEZs for
authorized operations approved by the BOA
Income Tax exemption on export income for a block of 10 years in 15 years
under Section 80-IAB of the Income Tax Act
Exemption from minimum alternate tax under Section 115 JB of the Income
Tax Act
Exemption from dividend distribution tax under Section 115O of the Income
Tax Act
Exemption from Central Sales Tax (CST)
Facilities / Incentive to SEZ Developer
100% FDI allowed for:
(a) Townships with residential, educational and recreational facilities on a case to
case basis,
(b) Franchise for basic telephone service in SEZ.
Income Tax benefit under ( 80 IA ) to developers for any block of 10 years in
15 years
Duty free import/domestic procurement of goods for development, operation
and maintenance of SEZs.
Exemption from Service Tax /CST.
Income of infrastructure capital fund/co. from investment in SEZ exempt
from Income Tax

 Investment made by individuals etc in a SEZ co also eligible for exemption

u/s 88 of IT Act
Developer permitted to transfer infrastructure facility for operation and
maintenance.
Generation, transmission and distribution of power in SEZs allowed
Full freedom in allocation of space and built up area to approved SEZ units
on commercial basis.
Authorized to provide and maintain service like water, electricity, security,
restaurants and recreation centers on commercial lines.
Obligation of the Unit under the SEZs Scheme
SEZ units have to achieve Positive Net foreign Exchange earning; a Legal
Undertaking is required to be executed by the unit with the Development
Commissioner.
The units have to provide periodic reports to the Development
Commissioner and Zone Customs.
The units are also to execute a bond with the Zone Customs for their
operation in the SEZ.
Any company set up with FDI has to be incorporated under the Indian
Companies Act with the Registrar of Companies for undertaking Indian
operations
STP Scheme
The Software Technology Park (STP) scheme is a 100% export oriented scheme
for the development and export of computer software & services using data
communication links or in the form of physical media including the export of
professional services. The major attraction of this scheme is single point contact
service to the STP units.
The customer premises in India is connected to their client located abroad by
gateway which is located at STPIs Centres through a radio link ,using either point

to point or point (CDMA) to multi point radio (TDMA) Link. This facilitates any
company operating in India or abroad connected to Internet, and to access
SoftNET. Today all major software exporters in India are customers of Softnet
(STPI-Datacom).
We aim at making India the most preferred country in the world for all types of
software resources and services.
The concept of STP Scheme was evolved in 1991 and enunciated the following
objectives:
To establish and manage infrastructure resources such as Data
Communication facilities, Core Computer facilities, Built-up space and other
common amenities.
To provide single window statutory services such as Project approvals,
import certification software valuation and certification of exports for
software exporters.
To promote development and export of software services through technology
assessments, market analyses, market segmentation and marketing support.
To train professionals and to encourage design and development in the field
of software technology and software engineering.
STP Scheme Benefits & Highlights
Approvals are given under single window clearance scheme.
100% Income Tax Holiday as per section 10A of the IT Act.
100% Customs duty exemption on imports
Equipment can also be imported on loan or lease basis.
A company can set up STP unit anywhere in India.
100% Foreign Equity is permitted and approved by jurisdictional Director of
STPI.

 All the imports of Hardware & Software in the STP units are completely
duty free. All relevant equipment/goods including second hand equipment
can be imported (except prohibited items)
Unit shall be a positive net foreign exchange earner. Net Foreign Exchange
Earnings (NFE) shall be calculated cumulatively in blocks of five years,
starting from the commencement of production
Use of computer system for commercial training purposes is permissible
subject to the condition that no computer terminals are installed outside the
STP premises.
Green card enabling priority treatment for Government clearances / other
services.
The sales in the Domestic Tariff Area (DTA) shall be permissible up to 50%
of the export in value terms.
STP units are exempted from payment of corporate income tax (Condition
apply)
The capital goods purchased from the Domestic Tariff Area (DTA) are
entitled for benefits like exemption of excise Duty & reimbursement of
Central Sales Tax (CST).
Capital invested by Foreign Entrepreneurs, Know-How Fees, Royalty,
Dividend etc., can be freely repatriated after payment of Income Taxes due
on them, if any.
Repartition of foreign currency for payments can be freely done.
Software units may also use the computer system for training purpose
(including commercial training).
Additional Benefits according to different State Government IT Policy.
Sales Tax Exemption
Stamp duty Wavier.

 Electricity duty exemption.

Octroi / Entry Duty Exemption
Property Tax on par with Residential Premises
Additional FSI
EHTP Scheme

An Electronic Hardware Technology Park (EHTP) may be an individual unit by

itself or a unit located in an area designated as EHTP Complex. As in the case of
STP Scheme, the EHTP Scheme is also administered by the Ministry of
Communications & Information Technology.
An EHTP can also be set up by the Central Government, State Government, public
or private sector undertakings or any combination of them.
Benefits of EHTP Scheme
Income Tax holiday as per section 10A of the IT Act
An EHTP may import free of duty capital goods, raw materials, components
and other related inputs. Second hand capital goods may also be imported by
EHTP units
An EHTP may gear up to 100 per cent foreign equity
Supplies that are effected in DTAs under global tender conditions and
payment in forex are also considered as part of relinquishment of export
obligation
An EHTP unit may be setup for both software and hardware in an integrated
manner
EHTP unit may purchase indigenous goods free of excise duty

 EHTP unit may sell Goods/Services in DTA up to 50% of FOB value of

exports, subject to fulfillment of positive NFE as per the policy & payment
of applicable duties
EOU scheme

The EOU scheme was introduced in the year 1980 vide Ministry of Commerce
resolution dated 31 st December 1980. The purpose of the scheme was basically to
boost exports by creating additional production capacity.
The EOU scheme is, at present, governed by the provisions of Export and Import
(EXIM) Policy, 1997-2002. Under this scheme, the units undertaking to export
their entire production of goods are allowed to be set up. The EOUs can export all
products except prohibited items of exports in ITC (HS).
Under the EOU scheme, the units are allowed to import or procure locally without
payment of duty all types of goods including capital goods, raw materials,
components, packing materials, consumables, spares and various other specified
categories of equipments including material handling equipments, required for
export production or in connection therewith. However, the goods prohibited for
import are not permitted. In the case of EOUs engaged in agriculture, animal
husbandry, floriculture, horticulture, pisciculture, viticulture, poultry, sericulture
and granite quarrying, only specified categories of goods mentioned in the relevant
notification have been permitted to be imported duty-free.
Benefits under EOU Scheme
Units are exempted from payment of Income Tax
All the imports to units are customs duty free.
Exemption from Central Excise Duty for the procurement of Capital Goods
and Raw Materials from domestic market.
Units are entitled to sell the product in local market upto 50% of the
products exported in value terms.
100% of foreign equity is permissible.

 Reimbursement of Cenral Sales Tax pad on domestic purchases.

Full Freedom for sub-contracting.
Exemption from the payment of Electricuty duty.
EOU unit can be set up at any of over 300 places all over India
The unit can import capital goods, raw materials, consumables, packing
material, spares etc. without payment of customs duty. Similarly, these can
be procured indigenously without payment of excise duty. Second hand
capital goods can also be imported.
They have to achieve positive NFE (Net Foreign Exchange Earnings).
Minimum investment in plant and machinery and building is Rs 100 lakhs
for EOU. This should be before commencement of commercial production.
Fast Track Clearance Scheme (FTCS) for clearances of imported
consignments for EOU.
Generally, all final production should be exported, except rejects upto
prescribed limit.
Sale within India should be on payment of excise duty. The duty which will
be equal to normal customs duty which would be payable on such goods, if
imported. However, in certain cases, excise duty payable will be only
50%/30% of normal customs duty payable on such goods if imported into
India .
Sub-contracting of production outside on job work basis is permissible after
obtaining necessary permission on annual basis
Job work for exports is permitted
Samples can be sold / given free within prescribed limit
Unutilized raw material can be disposed of on payment of applicable duties

 The unit can exit (de-bond) with permission of Development Commissioner,

on payment of applicable duties.
Central Sales Tax (CST) paid on purchases is refundable (but not local tax).
Prescribed percentage of foreign exchange earnings can be retained in EEFC
account in foreign exchange.
100% foreign equity is permissible, except in a few cases.
Supplies made to EOU by Indian supplier are deemed exports and supplier
is entitled to benefits of deemed export.
Restrictions under Companies Act on managerial remuneration are not
applicable.
No restrictions on External Commercial Borrowings.
BIO-TECHNOLOGY PARK SCHEME

Biotechnology is a fast emerging sector and is expected to play a key role in the
new economy. India has many comparative advantages in terms of knowledge,
skills, R&D facilities and costs in the sector. The institutional infrastructure in the
country provides the basic foundation for these strengths to translate into business
opportunities. India has a biotech agenda, to make it possible all the stakeholders
of this sector need to have a common goal. The government, industry, academia,
public research, and funding agencies all need to work hand in hand. They need to
be competitive, collaborative, and cohesive. They need to strike the right balance
between public welfare and company welfare.
Biotechnology Administration in India
As a developing nation, India has recognised the role of biotechnology as a tool for
growth and advancement of various sectors such as agriculture and health.
Realising the immense potential of biotechnology, India began its initiatives in this
sector in the 1980s. The Sixth Five Year Plan (1980-85) laid emphasis on
biotechnology development. The plan proposed to develop and strengthen
capabilities in areas such as immunology, genetics, communicable diseases, etc.

Since then, there have been multiple developments in the field of biotechnology in
India . The various institutions responsible for administering the biotechnology
industry in India include the following:
Government Bodies The Department of Atomic Energy (DAE), the Department
of Biotechnology (DBT), the Department of Science and Technology (DST) and
the Department of Scientific and Industrial Research (DSIR) are the government
bodies.
Affiliated Bodies The University Grant Commission (UGC), the Indian Council
of Medical Research (ICMR), the Indian Council for Agriculture Research (ICAR),
and the Council of Scientific and Industrial Research (CSIR) are independent
bodies affiliated to the Ministry of Human Resource Development, the Ministry of
Health, the Ministry of Agriculture, and the Ministry of Science and Technology,
respectively.
Policy Initiatives
The union government as well as the state governments have taken various
initiatives to boost biotechnology in India . Several state governments including
Karnataka, Tamil Nadu, Andhra Pradesh, Maharashtra and Delhi have taken
initiatives to encourage entrepreneurs to set up biotech industries in their states.
Some of the key steps taken include:
announcing a separate Biotechnology Policy for states as a recognition of
the importance of the sector as a key growth area;
setting up of exclusive Biotechnology Parks;
instituting Task Forces with experts to guide them on policy issues.
Indian Biotechnology Industry An Overview
The Indian biotechnology industry accounted for a 1.86 percent contribution worth
INR 4,745 crores to the USD 91.0 billion global biotechnology industry in 200405. The Indian biotechnology industry registered an annual growth rate of 36.55
percent over INR 3,475 crores in 2003-04. The Indian biotechnology industry grew
at a CAGR of 43.5 percent during the period 2002-05
The Indian Biotechnology is represented by the following five segment

 BioAgriculture The BioAgriculture sector comprises plant-derived

pharmaceuticals, biotechnological development in crops and livestock,
marine science, and forests.
BioIndustry The BioIndustry sector comprises biotechnologically
developed products such as enzymes, bio-instrumentation and bioprocess
equipments. Bio-instrumentation includes surgical and medical instruments.
BioInformatics BioInformatics or computational biology refers to the use
of multiple techniques, including applied mathematics, computer science,
information technology, Technology is used in multiple research areas such
as comparative genomics, gene expression analysis, high-throughput image
analysis, modelling of biological systems, protein expression analysis,
sequence analysis, structure prediction, etc.
BioPharmaceuticals Biopharmaceuticals may be defined as medical
drugs that are produced by biotechnology. Biopharmaceuticals usually
comprise macromolecules, which are created through genetic manipulation
of living organisms using gene cloning, recombinant DNA (gene slicing) or
cell fusion technologies. The major thrust areas in biopharmaceuticals are
diagnostics, monoclonal antibodies, oligonucleotides, recombinant proteins
and vaccines.
BioServices BioServices comprises research services provided by contract
research organisations (CRO). Examples of such organisations operating in
India include Quintiles, Syngene and SiroClinpharm. Biotechnology in India
can be divided into three broad areas human and animal health care,
agricultural, and industrial.
Market Growth
During 2004-05, the Indian Biotechnology industry grew at 36.55 percent. The
BioPharmaceuticals segment grew by approximately 29.72 percent, primarily due
to the vaccines market. The BioAgriculture segment grew at a rate of 153.85
percent, driven by the presence of two Bt-cotton companies, Mahyco-Monsanto
and Rasi Seeds, followed by the BioServices segment with a growth of 54.55
percent. The BioIndustry segment also registered a strong growth rate of 35.45
percent.